No doubt, we live in volatile times. The complexity, interconnectedness and intricacy of global markets is causing executives around the globe to check decisions once, twice and even delay important decisions because they cannot “peer around the corner.” Some marketing executives are asking themselves, “What are the odds of–” to help make tough decisions. Others are saying, “We’re in a new paradigm,” and “the past is no longer relevant.” How are you making critical decisions?
Like it or not, important marketing decisions regarding forecasting, budgeting, hiring and resource allocation must be made for the coming year and beyond.
Marketing executives who sit on the sidelines and watch/wait could be missing some valuable opportunities to stake a claim in new markets, build market share, or capitalize on competitor weakness. Then again, sitting on the sidelines may be the smarter approach.
A common form of decision making is using probability to determine potential outcomes. In a casino–with games of chance–it’s pretty easy to figure out the “odds” of beating the house. Outside of the casino, life gets a little messier. We can however, use statistical analysis based on historical data to help us divine the probability of certain events happening (assuming a normal distribution and independence).
In an Edge essay, Dr. Nicholas Nassim Taleb tells us, “Statistical and applied probabilistic knowledge is the core of knowledge. Statistics is what tells you if something is true, false or merely anecdotal. It is the logic of science, and the instrument of risk taking.”
“You cannot be a modern intellectual and not think probabilistically,” Dr. Taleb declares. But he also counsels us that there are many instances where “statistics don’t work–where stats are unreliable, where your knowledge is no longer valid.” And judging from the volatility of events in 2008, we just might be in new and uncharted territory where the usual tools and methods just plain don’t work.
If you believe 2008 has ushered in a new paradigm where the old rules no longer apply, one is essentially left with two choices: Pattern recognition of a different kind–(intuition) and thereby making decisions “by the gut”, or inaction–doing nothing, at least for now.
Is gut decisioning the best approach to plan for 2009? Gary Klein, author of “The Power of Intuition” says, “Analysis doesn’t work well in challenging situations where information is scarce, time is short, and stakes are high.”
While it is hard to argue that information is scarce, time is definitely of the essence and for many companies; the stakes (i.e. survival) have never been higher.
Lastly, there’s always inaction as a completely valid alternative. Many companies are maintaining the status quo, hoarding cash, letting the bodies pile up, and waiting for a better day before committing to major investments.
Every company is different, and every industry has their own challenges right now. But it has been said that challenge is only one side of the coin. Turn it over, and “opportunity” might be staring back at you.
* Given the events of 2008, are we in a new paradigm? If so, do the old rules no longer apply?
* Consumer confidence is at levels unseen since the early 1990s. Is the marketplace, (both B2C and B2B) overly pessimistic?
* In your forecasting models (or mental processes), are you “weighting the events of 2008″ more heavily than previous years?
* How closely are you monitoring daily/weekly events to determine whether to ramp up/down your spending plans for next year? What “key event” are you seeking that will be a major variable in your decision making?